Top 100 Megabrands

An economy firing on all cylinders propelled first-half media spending to a record $47.66 billion, up a phenomenal 14.9% over the prior-year period. Catalysts were burgeoning outlays in technology, drug advertising and financial services along with steady spending from Detroit.

The nation's Top 100 megabrands, meanwhile, amassed $12.4 billion in spending, some 74% of the Top 200's ad take of $16.74 billion. The Top 200 grew a record 15.2%, well above the 8%-10% range commanded by the Top 200 in first-half spending going back to 1990 when Advertising Age first created this semiannual report. The Top 200 is analyzed in this report because it adds category variety lacking in the auto-dominated Top 100.

Automakers, led by General Motors Corp.'s Chevrolet division, the top-spending megabrand, anchored the Top 200 pack by claiming seven of the top 12 megabrand positions.

But growth hastened after the new economy sectors of computers (up 29.2%) and online-influenced financial services (up 44.5%) for all megabrands in those Top 200 sectors, and the ever-growing, direct-to-consumer drug area, up 62.4%.

SLOWDOWN SEEN

Yet, the torrent of ad spending in the first half may not annualize into record returns for the full year. The once-invincible technology sector of the economy is cooling fast, and interest rate increases by the Federal Reserve loom ahead, potentially influencing a softer-landing for the economy by year-end.

Magazine spending in August, the most recent month reported, was up 11.3% from August 1999, good growth but hardly the 17% spending pace that filled magazines in the first half, according to Publishers Information Bureau.

In the Top 200, autos accounted for $4.1 billion in media from 30 megabrands, dwarfing retail, the next largest ad category at $2.34 billion from 28 megabrands. However, auto's aggregate growth of 5.4% lagged far behind the Top 200 as a whole; in fact, auto showed the least growth of any of the group's top 10 industry categories.

Chevrolet, whose second-half spending in 1999 pushed it into the most-advertised spot for that year, held fast to its lead in 2000 by spending $392 million, up 4.9%. Not far behind Chevy is the now unraveling telecom giant AT&T Corp.

With all that spending, Chevy's market share remained flat at 15.2% as its first-half unit sales grew 7.2% compared to 7% for the industry, according to Ad Age sister publication Automotive News. By the end of the third quarter, though, Chevy's market share had slipped further, to 15%, according to AN, although it propped up GM's share that dropped 1.3 points to 28.4% from three-quarter cumulatives in '99. Market shares for Ford Motor Co. and DaimlerChrysler were down.

TV THE FAVORITE

TV in all its forms remains the media of choice for automakers, according to Competitive Media Reporting, which tracks the 11 media used in this report. Almost $3 of every $4 spent on auto marques went into some form of TV. Chevrolet put even more of its money into TV, elevating TV spending 27% over last year's figures while paring 24% from print.

Chevy's concentration in broadcast media is typical of the Top 200. Broadcast (all TV, cable and radio) was up 17.1% for all advertisers, accounting for 55.8% of media spending in the U.S., and up 21.5% within the Top 200, accounting for 70.6% of their spending.

Lower spending in print media was also typical of the Top 200. Newspapers grew by 3.8% for the Top 200 vs. 5.7% growth for all advertisers. The Top 200's magazine spending advanced only 3.8% while all advertisers charted 16.3% growth.

In the elite 200, magazines felt the weight of reduced auto outlays, which were down 5.4% in the first half. Autos accounted for 8.4% of magazine spending. By contrast, magazines benefited from the technology boom, receiving almost 35% more dollars from that sector than in first half '99, according to PIB.

After the relaxing of federal guidelines in 1997 that mired drug advertising in awkward informational restrictions, spending by pharmaceutical companies has grown rapidly. In the Top 200, drug advertising was up 62.4% in the first half. Merck & Co.'s prescription-only Vioxx osteoarthritis drug, with $95.2 million in its first year on the market, ranked highest among drug brands. It was introduced in the second half of 1999.

MORE DIFFUSED

Leadership in the telecommunications industry has become diffused as services have broadened to include wireless, cable and Internet connections. Also, longtime leader AT&T is about to break itself into four companies, each with its own strategy and ad budget, no doubt a boon for the nation's media.

Although the Top 200 telephone services category advanced 11.9% in ad spending in the first half among 14 megabrands, the lead players did not march to the same drummer.

Spending by the AT&T and the WorldCom megabrands dropped 1.8% and 26.3%, respectively. Declines also were registered by WorldCom's 10-10-200 and 1-800-COLLECT megabrands, separate in this report from the WorldCom megabrand.

The highly competitive wireless arena has become the advertising and marketing backbone of the telecommunications giants. Cingular, the SBC Communications and BellSouth joint wireless venture, for example, just picked an agency to handle its $300 million account.

Prognosticators say the second half of the year for all advertising should still be strong, the impetus coming from the combination of the Olympics, presidential elections and the holiday season.

But 2001 may be a different odyssey. Without the presidential elections, Olympics and dot-com dollars of this year, the onus for sustained growth may largely fall back to those big-shoulder spenders, autos and retailers.